Her Honor

Public Sector Retirees Cash In

Thursday, Feb. 17, 2011

Think pension checks are bankrupting cities? There is another factor draining the municipal coffers. Unused vacation and sick days are being “cashed out” by public employees, to the tune of hundreds of thousands of dollars. In many jurisdictions in California, there is no “cap” on the number of days you can accrue, allowing individuals to “roll over” unused time and collect the accumulated hours as part of leaving public service.

This has been a long-standing practice, but it came to light recently when state Controller John Chiang surveyed government salaries and benefits in the wake of the scandal in the city of Bell.

The numbers are staggering. Retired San Jose police chief Rob Davis got a check for $327,454 for his unused vacation and sick days. In San Francisco, former police chief Heather Fong was paid $303,653 for unused vacation, sick, and comp time.

These are all legal payments, part of contracts negotiated by city councils who were adding perks at a time when they could not offer pay increases. San Jose also offers some employees a vacation “sellback” program, allowing individuals to turn in up to 120 hours of vacation for cash compensation.

Times have changed but the terms of those MOU documents do not reflect current realities. The private sector generally requires vacation days to be taken, adopting a “use it or lose it” policy. Sick days are usually capped; disability programs cover longer illnesses.

In addition to considering layoffs, pay reductions, and increasing employee contribution for benefits, cities should not overlook this opportunity to save money.